Nine Entertainment Co. Holdings Limited · ASX:NEC
Nine Entertainment — H1 FY2020 Earnings Presentation
46 slides from Nine Entertainment's earnings presentation, Feb 26, 2020
Slide 1: 2020 Half Year Results Presentation
26 February 2020 ASX Markets Announcement Office ASX Limited 20 Bridge Street Sydney NSW 2000 2020 HALF YEAR RESULTS PRESENTATION Attached is a copy of the 2020 Half Year Financial Results presentation for Nine Entertainment Co. Holdings Limited. Rachel Launders Company Secretary Authorised for rele
Slide 2: FY20 Interim Results | 26 February 2020
FY20 INTERIM RESULTS | 26 FEBRUARY, 2020
Slide 3: Important Notice and Disclaimer
Important Notice and Disclaimer expectations about the performance of its businesses. likelihood of achievement or reasonableness of any This document is a presentation of general background Forward looking statements can generally be identified by forward looking statements, forecast financial info
Slide 4: CEO Hugh Marks
CEO Hugh Marks 1 i alte mhaaat if ife & ena . AT FIRST SIGHT a2 Bl ’
Slide 5: Operational Highlights
OPERATIONAL HIGHLIGHTS TELEVISION 9NOW METRO MEDIA STAN DOMAIN RADIO Dominance of all key 50% share of market Strong growth in >1.8m active subs Yield and depth Audiences strong in a ratings demos (primary up 43% digital (advertising & growth, and improving very difficult ad channel, prime time) Exp
Slide 6: Underlying Growth Offsets Cyclical Markets
UNDERLYING GROWTH OFFSETS CYCLICAL MARKETS 4.5 2.0 3.0 5 1 2 Continuing business, Pro Forma basis in H1 FY19 Domain includes disposals as reconciled in Appendix 4
Slide 7: Digital Transformation Accelerating
DIGITAL TRANSFORMATION ACCELERATING $M EBITDA contribution from Digital1 growing strongly 300.0 250.0 200.0 150.0 100.0 50.0 ~40% of +103% total 0.0 H1 FY19 H1 FY20 Digital Non-Digital 1 Digital includes 9Now, 9Digital, Stan and the digital components of Domain (59%) and Metro Media 6
Slide 8: CFO Paul Koppelman
CFO PAUL KOPPELMAN 7
Slide 9: Accounting Basis
ACCOUNTING BASIS The Reported/Statutory results include the contribution from Fairfax Media and Stan from 7 December 2018. The Reported/Statutory results include additional amortisation arising from Purchase Price Accounting for the merger with Fairfax as well as the impact of AASB16, accounting for
Slide 10: Reported Results
REPORTED RESULTS 1 GROUP GROUP STAT. NPAT REVENUE EBITDA $102M $1.2B $251M A$M H1FY20 H1FY19 VARIANCE REVENUE 2 1,182.5 709.8 +67% GROUP EBITDA 2 250.8 177.8 +41% EBIT2 176.9 157.4 +12% GROUP NPAT, PRE MINORITIES 2 114.3 108.5 +5% SPECIFIC ITEMS (NET OF TAX) (12.4) 62.8 NM STATUTORY NET PROFIT, CONT
Slide 11: Specific Items
SPECIFIC ITEMS A$M, CONTINUING BUSINESS BASIS H1 FY20 DOMAIN – REFER DOMAIN ACCOUNTS (ASX:DHG), 20th FEB 2020 7.9 RESTRUCTURING & TERMINATION-RELATED COSTS (9.4) ACQUISITION/DIVESTMENT-RELATED COSTS – FXJ, MRN, ACM, WZ (8.5) OTHER (8.5) TOTAL SPECIFIC ITEMS BEFORE TAX (18.4) TOTAL TAX RELATING TO SP
Slide 12: Group Results
G R O U P R E S U LT S CONTINUING BUSINESS BASIS 11
Slide 13: Group Results
GROUP RESULTS GROUP LIKE BASIS GROUP DIVIDEND EBITDA EBITDA NPAT 1,2 5 CENTS, $251M 1 -8% $105M FULLY FRANKED H1FY20 H1FY20 EX H1FY19 A$M, CONTINUING BUSINESS BASIS REPORTED 1,2 AASB16/PPA 2 PRO FORMA 2 VARIANCE REVENUE 1,182.5 1,182.9 1,203.5 -2% GROUP EBITDA 250.8 230.5 251.6 -8% EBIT 176.9 185.2
Slide 14: Reconciliation of Accounting Changes
RECONCILIATION OF ACCOUNTING CHANGES P&L impact – AASB16 (from 1 July 2020) Balance sheet impact – AASB16 • Rental costs ($20.3m) recategorized as depreciation • Recognition of lease liability ($291m) and right-of-use asset ($20.0m) and financing costs ($6.0m) ($257m) as at 31 December 2019 P&L impa
Slide 15: Broadcast
BROADCAST Revenue contribution1 – H1 FY20 H1 FY20 H1 FY20 H1 FY19 A$M REPORTED EX AASB16 PRO FORMA VARIANCE REVENUE FTA TELEVISION 531.2 531.2 563.5 -6% 9NOW 42.0 42.0 29.1 +44% 54% 52% RADIO 57.6 57.6 68.2 -16% BROADCAST REV 630.8 630.8 660.8 -5% COSTS FTA TELEVISION 420.6 427.7 402.3 -6% 9NOW 14.7
Slide 16: FTA Television
FTA TELEVISION METRO FTA REVENUE PREMIUM FTA COSTS MARKET SHARE AD REV UP -7.0% 1 38.7% +25% 6% in H1 H1 FY20 H1 FY20 H1 FY19 $M REPORTED EX AASB16 PRO FORMA VARIANCE TELEVISION REVENUE PREMIUM AD REVENUE 84.7 84.7 67.6 +25% OTHER2 446.5 446.5 495.8 -10% TOTAL TELEVISION REVENUE 531.2 531.2 563.5 -6
Slide 17: FTA Impacted by Market & Contracted Sports
FTA IMPACTED BY MARKET & CONTRACTED SPORTS ~-$35m FTA market – 7% Contracted sports costs ~$23m R e f e r to gl o ssary in Appe n dix 7 f o r de f in itio n s. To tal s m ay n o t add du e to ro u n din g. 16
Slide 18: Growth in Premium FTA Revenue Continues
GROWTH IN PREMIUM FTA REVENUE CONTINUES $m $90 $80 +7% ex Ashes $70 cricket $60 ~16% of $50 +2% total FTA revenues $40 $30 +10% $20 $10 $0 H1 FY19 H1 FY20 Entertainment NRL Cricket Other 17
Slide 19: 9Now
9NOW BVOD IS BVOD MARKET1 9NOW <10% OF +43% TO $87M SHARE 1 DIGITAL VIDEO ~50% MARKET H1 FY20 H1 FY20 H1 FY19 A$M REPORTED EX AASB16 PRO FORMA VARIANCE REVENUE 42.0 42.0 29.1 +44% COSTS 14.7 14.8 12.7 -17% EBITDA 27.3 27.1 16.4 +65% MARGIN 65.0% 64.6% 56.4% +8.2 PTS • NBC Universal content rolled ou
Slide 20: TV Combined
TV COMBINED VOZ TO MARKET1 #1 SHARE1 LAUNCH -5% TO $1.4B 39.9% APRIL 2020 H1 FY20 H1 FY20 H1 FY19 A$M REPORTED EX AASB16 PRO FORMA VARIANCE REVENUE 573.2 573.2 592.6 -3% COSTS 435.3 442.5 415.0 -7% EBITDA 137.9 130.7 177.6 -26% MARGIN 24.1% 22.8% 30.0% -7.2 PTS Six months to December, EBITDA2, pre A
Slide 21: Nine Radio
NINE RADIO RADIO MRN SHARE SYNERGIES COSTS MARKET1 DECLINE TO DELIVER DOWN 2% -10% REV -16% c$5M IN H2 H1 FY20 H1 FY20 H1 FY19 A$M REPORTED EX AASB16 PRO FORMA VARIANCE REVENUE 57.6 57.6 68.2 -16% COSTS 50.0 51.9 52.8 +2% EBITDA 7.6 5.7 15.4 -63% MARGIN 13.2% 9.9% 22.6% -12.7 PTS • Completion of acq
Slide 22: Digital and Publishing
DIGITAL AND PUBLISHING Revenue contribution1 – H1 FY20 H1 FY19 H1 FY20 H1 FY20 A$M PRO VARIANCE REPORTED EX AASB16 FORMA REVENUE METRO MEDIA3 228.0 228.0 228.1 - 26% WEATHERZONE (SOLD 2.9 2.9 6.6 NM SEPT) 9 DIGITAL PUBLISHING 57.4 57.4 63.6 -10% EBITDA contribution1,2 – H1 FY20 TOTAL REV 288.3 288.3
Slide 23: Metro Media
METRO MEDIA DIGITAL DIGITAL 10% MASTHEADS EBITDA PUBL’G GROWTH REVENUE IN DIGITAL +13% DOUBLE-DIGIT +8% SUBSCRIBER ADVERTISING GROWTH H1 FY20 H1 FY20 H1 FY191 A$M REPORTED EX AASB16 PRO FORMA VARIANCE PRINT REVENUE CIRCULATION/SUBSCRIPTION1 73.8 73.8 79.1 -7% ADVERTISING 63.9 63.9 70.9 -10% DIGITAL
Slide 24: Domain
H1 FY193 DOMAIN A$M, CONTINUING BUSINESS BASIS H1 FY20 REPORTED H1 FY20 EX AASB16 PRO FORMA VARIANCE REVENUE RESIDENTIAL 84.5 84.5 93.6 -10% Revenue contribution1 – H1 FY20 MEDIA, DEVELOPERS & 24.2 24.2 25.8 -6% COMMERCIAL AGENT SERVICES 16.8 16.8 15.8 +6% 8% 9% CORE DIGITAL 125.5 125.5 135.2 -7% CO
Slide 25: Stan
STAN GROWTH IN STRONG USER EBITDA (AND REVENUE ACTIVE ENGAGEMENT CASH) GROWTH SUBSCRIBERS +25% 1 TURNAROUND +79% TO >1.8M C OST S UP 1 8 % +$35M H1 FY20 H1 FY20 H1 FY19 A$M REPORTED EX AASB16 PRO FORMA VARIANCE REVENUE 116.6 116.6 65.2 +79% COSTS 102.6 103.1 87.0 -18% EBITDA 14.0 13.5 (21.8) NM MARG
Slide 26: Cash Flows
CASH FLOWS H1 FY19 A$M, WHOLLY-OWNED, CONTINUING BUSINESS H1 FY20 ADJUST H1 FY20 ADJUST1 PRO BASIS REPORTED AASB16 ADJUSTED FORMA EBITDA (BEFORE ASSOCIATES)1 268.4 (69.8) (15.6) 183.0 185.6 CASH WORKING CAPITAL (23.0) (0.1) (6.8) (29.9) (6.0) CONVERSION 85% LICENCE/SPECTRUM FEE TIMING - - - - (11.2)
Slide 27: Investment Drives Higher Debt
INVESTMENT DRIVES HIGHER DEBT 12.5 7.8 -7.1 100% owned continuing business EBITDA, post Includes AASB16 dividends received from Domain and Acquisition of MRN Macquarie $139m (incl Includes debt) and ~$20m for Nth Weatherzone Sydney disposal for relocation $29.3m A$M WHOLLY OWNED GROUP DOMAIN CONSOLI
Slide 28: CEO Hugh Marks
27 CEO Hugh Marks 1 i alte mhaaat if ife & ena . AT FIRST SIGHT a2 Bl ’
Slide 29: An Increasingly Digital Business with Efficiency Opportunities
A N I N C R E A S I N G L Y D I G I T A L B U S I N E SS WITH EFFICIENCY OPPORTUNITIES TRANSFORMING BUILDING RETURNING Investing in the premium Using the core of broadcast to power Growing cash flows and content that drives profitability growth businesses dividends to shareholders Nine Network and A
Slide 30: 9Now: Growing Strongly
9NOW: GROWING STRONGLY 100 90 CAGR 80 +64% 70 60 50 40 30 CAGR +62% 20 10 0 6 monthly streams (m) 9Now revenue - 6 mthly ($m) 29 29
Slide 31: Video – A $9bn Market in Australia
VIDEO – A $9BN MARKET IN AUSTRALIA PAY TV FTA TV SVOD DIGITAL VIDEO 30 BVOD Pay TV YouTube Facebook Other 30
Slide 32: Australia's Digital Footprint
AUSTRALIA’S DIGITAL FOOTPRINT Monthly Unique Audience ('000s)1 0 5,000 10,000 15,000 20,000 25,000 Google Facebook Microsoft eBay Apple Inc. News Corp Australia Australian Federal Government PayPal Woolworths Nine Entertainment Co Coles Group Amazon 1 D e c e m be r data, N ie l se n .
Slide 33: Australian Financial Review – Increasingly Digital
AUSTRALIAN FINANCIAL REVIEW – INCREASINGLY DIGITAL Growing Readership1 Growing importance of Subscription Revenue Digital 1.8m Print Subscription Advertising 48% +52% +7% 1.0m (pcp 56%) (pcp 44%) +5% Dominant and growing reliance on digital subscription revenue3 Growing Digital subscribers2 Print 87
Slide 34: Key Drivers to FY20
KEY DRIVERS TO FY20 BROADCASTING 9NOW METRO MEDIA STAN DOMAIN FTA market conditions remain Significant leverage Lead BVOD player in Growing digital and Stable, and growing to improving weak. H2e ~5% fast growing subscription base content mix from property cycle plus decline. Offset by segment more t
Slide 35: Group Outlook
GROUP OUTLOOK • In terms of the FY20 result, premised on assumptions as detailed in NEC’s ASX release dated 26 February 2020, Nine expects to report Group EBITDA at a similar level to the FY19 Pro Forma result (of $423.8m). 34
Slide 36: Appendices
3Nine 35] APPENDICES
Slide 37: Appendix 1: Combined Group Divisional Results
APPENDIX 1: COMBINED GROUP DIVISIONAL RESULTS TOTAL BROADCAST (INCL DIGITAL & H1 FY20, A$M DOMAIN1 STAN CORPORATE ASSOCIATES INTERSEGMENT CONTINUING 9NOW) PUBLISHING BUSINESS REVENUE 630.8 288.3 147.4 116.6 9.2 - (9.3) 1,182.9 PCP 660.8 298.3 183.9 65.2 9.1 - (13.8) 1,203.5 % CHG -5% -3% -20% +79% +
Slide 38: Combined Group Divisional Results (cont)
COMBINED GROUP DIVISIONAL RESULTS (cont) DIGITAL & TOTAL CONTINUING H1 FY20, A$M BROADCAST (INCL 9NOW) DOMAIN1 STAN CORPORATE ASSOCIATES PUBLISHING BUSINESS EBITDA – 145.5 53.8 47.0 14.0 (9.6) - 250.8 REPORTED D,A (EX AASB16 (15.5) (9.3) (18.1) (1.5) (0.9) - (45.3) & PPA) AASB16& PPA (7.9) (10.4) (5
Slide 39: Appendix 2: Minority Interests
APPENDIX 2: MINORITY INTERESTS H1 FY20 H1 FY20 H1 FY19 A$M REPORTED EX AASB16 PRO FORMA MACQUARIE RADIO (54.4% UNTIL COMPLETION) 1.3 1.2 3.3 DOMAIN (59.2%) 7.9 8.4 10.81 TOTAL MINORITIES, CONTINUING BUSINESSES (PRO FORMA) 9.2 9.6 14.1 1 Pro Forma estimate assuming Domain was listed from 1 July 2018
Slide 40: Appendix 3: Metro Media - Reconciliation
APPENDIX 3: METRO MEDIA - RECONCILIATION H1 FY19 A$M AASB152 WEATHERZONE ALLURE -> 9DIGITAL H1 FY19 PREVIOUS1 CIRCULATION/SUBSC PRINT REVENUE 86.4 (7.3) 79.1 RIPTION ADVERTISING 71.0 70.9 DIGITAL REVENUE SUBSCRIPTION 27.7 +7.3 35.0 ADVERTISING 32.7 32.8 WEATHERZONE +6.6 6.6 OTHER INCL. 23.0 (6.6) (6
Slide 41: Appendix 4: Domain – Reconciliation
APPENDIX 4: DOMAIN – RECONCILIATION H1 FY19 H1 FY19 A$M COMPARE & CONNECT STAR WEEKLY PREVIOUS PRO FORMA REVENUE CORE DIGITAL 135.2 - - 135.2 CONSUMER SOLUTIONS 14.9 (13.4) 1.5 TOTAL DIGITAL 150.1 (13.4) 136.7 PRINT 32.8 (5.5) 27.3 CORPORATE 0.9 0.9 TOTAL REVENUE 183.9 (13.4) (5.5) 164.9 COSTS 131.2
Slide 42: Appendix 5: Impact of AASB16, PPA
APPENDIX 5: IMPACT OF AASB16, PPA $M AASB LEASE H1FY20 EX H1FY20 REPORTED1 PPA ADJUSTMENT AASB16 EBITDA BROADCASTING 145.4 (9.2) - 136.3 DIGITAL & PUBLISHING 53.8 (7.0) - 46.7 STAN 14.0 (0.5) - 13.5 DOMAIN 47.0 (3.6) - 43.5 CORPORATE (9.6) - - (9.6) ASSOCIATES - - - - GROUP EBITDA 250.8 (20.3) - 230
Slide 43: Appendix 6: Capital Expenditure
APPENDIX 6: CAPITAL EXPENDITURE H1 FY20 H2 FY20 FY20 FY21 A$M ACTUAL ESTIMATED ESTIMATED FORECAST SYDNEY M0VE 20.5 56 76 35 OTHER CAPEX 30.7 34 65 66 TOTAL CAPEX 51.2 90 141 101 Excludes Domain, Stuff and MRN pre-acquisition 42
Slide 44: Appendix 7: Discontinued, Held for Sale
APPENDIX 7: DISCONTINUED, HELD FOR SALE H1 FY20 H1 FY20 A$M REPORTED H1 FY19 VARIANCE EX AASB16 REVENUE ACM (SOLD) Advertising - - 121.2 NM Circulation - - 35.9 NM Other - - 37.0 NM TOTAL REVENUE - ACM - - 194.1 NM Stuff1 Advertising 67.0 67.0 74.3 -10% Circulation 41.7 41.7 43.1 -3% Other2 21.1 21.
Slide 45: Appendix 8: Glossary
AP P E N D I X 8 : G L O S S A RY AASB16 – The recently updated accounting standard Group EBITDA – EBITDA plus share of Associates’ net use of IP, talent and social, primarily linked to key for leases, which applies to reporting periods profit content franchises beginning on or after 1 January 2019
Slide 46: Nine
Nine
Nine Entertainment Co. Holdings — H1 FY2020 Earnings Presentation on 6ix